Prepayment Effects On Rates
One of the things that impacts the value of servicing is the length of time that the company servicing the loan (i.e., collecting the payments) expects to have the loan on their books. No one wants to pay a 2 or 3 point premium for a loan that they service for only 3 months, so loans paying off early (“prepayment”) is watched carefully. Last weeks’ prepayment speeds indicated a pick up in early pay offs. Interestingly, the Fed’s purchases of mortgage-backed securities, along with the plan to make high LTV loans eligible for refinance has led to increased speeds, and faster expectations moving forward – which has not helped higher rate mortgage prices.
Modification Income Verification
Anyone trying to modify a mortgage, and then having the borrower (who misled the broker during the original process) mislead them is in a difficult position. So what would you call a modified loan to a borrower who exaggerated (lies) about how little he/she makes (and has) to get a loan modified after lying to get the loan in the first place? A reverse-liar loan? An inverted-liar loan? A double-prevaricator loan? A pathological liar loan? A serial falsifier loan? A storyteller loan? A fibber note? A reverse truth loan? Stay tuned…
Chase Discontinues Jumbo For Mortgage Bankers
Chase told their correspondents, “After careful consideration of the current market, Chase Correspondent Lending has made a business decision to discontinue the availability of our Non-Agency products effective Thursday, March 19, 2009. Effective March 19, 2009, Chase Correspondent Lending is making the following revisions to our Agency products and programs: Increasing the cash-out limit on Freddie Mac Fixed Rate High Balance loans from $100,000 to $200,000; Reducing the LTV on Fannie Mae and Freddie Mac Amortizing Fixed Rate Primary Residence Cash-Out Refinance Co-ops from 85% to 80%; Reducing the LTV on Agency High Balance Interest Only 5/1 ARM Primary Residence No Cash-Out Refinance Condos from 90% to 80%; Eliminating Subordinate Financing on Agency High Balance Amortizing 5/1 ARM Primary Purchase Co-ops.”
Thornburg Bankruptcy Imminent
Thornburg Mortgage, whom every broker in a high cost area remembers with great fondness, said yesterday it may file for Chapter 11 bankruptcy protection. The lending banks are giving Thornburg until the end of the month before calling in the lines.
CPI Up Slightly
The news out this morning consisted of the U.S. consumer prices. The CPI rose in February, according to the Labor Department, by 0.4%, about as expected. It is the biggest monthly gain since last July, after increasing 0.3 percent in January. Core prices, which exclude food and energy items, were +0.2 percent in February after rising by the same margin the prior month. On a year-over-year basis, consumer prices were up 0.2 percent. We still have the Fed’s announcement later today, but for now the 10-yr stands at 2.98% and mortgage prices are a shade better.
Thank you Jack W.:
A US Congressman is up for re-election and out on the campaign trail. He’s driving by an Indian reservation and decides to stop in and stump for votes. A crowd of tribe members surrounds him as he gets started.
“I will lower your taxes, get you good jobs, and make sure your kids are healthy and educated”, said the Congressman.
“Oom Galla Galla”, answered the tribe.
“I’ll make sure you have more money so you can purchase a new F150 truck!” said the Congressman.
“Oom Galla Galla”, cheered the tribe.
“Together, we can bring the casinos in so your tribe will enjoy perpetual wealth!” said the Congressman.
“Oom Galla Galla”, thundered the tribe.
After a few more grand promises and louder cheers of “Oom Galla Galla” from the crowd, the Congressman is offered a tour of the reservation, which he readily accepts.
He notices a herd of fat and healthy cattle and asks, “Chief, May I go take a closer look at your heifers and steers?” to which the Chief smilingly replied, “Sure, but don’t step in the Oom Galla Galla”.